Session 9 : GATT in International Trade Law

Mata Kuliah : Law in International Business
Dosen          : Dr. Shidarta, S.H., M.Hum
Topik           : GATT in International Trade Law
Metode        : GSLC

1. What is GATT?

was originally created by the Bretton Woods Conference as part of a larger plan for economic recovery after World War II.

GATT was an agreement not an organization. Originally, the GATT was supposed to become a full international organization like the World Bank or IMF called the International Trade Organization. However, the agreement was not ratified, so the GATT remained simply an agreement.

GATT was established in 1947 and lasted until 1994 and then it was replaced by WTO in 1995.

GATT was implemented to further regulate world trade to helped in the economic recovery following the war. 

GATT had 149 members

2. The purpose of GATT

for creating a climate of international trade that is safe and clear to the business community, and also to create sustainable trade liberalization, employment and healthy trading environment.

According to the Preamble of GATT, the objectives of the contracting

parties include,

• raising standards of living

• ensuring full employment

• a large and steadily growing volume of real income and effective demand

• developing the full use of the resources of the world 

• expanding the production and exchange of goods.

3. The function of GATT

a. First, a set of regulations [rules] governing multilateral trade transactions undertaken by GATT member countries by providing a set of trade regulations.

b. Second, as a forum for trade negotiations and the container trade practices can be aligned to be freed from the obstacles that interfere with [trade liberalization]

c. Third, strive for GATT trade rules or practices so it became clear both through the opening of the national market or the enforcement of its rules and also the dissemination of implementation.

4. GATT trade rotation

5. Marrakesh Agreement

was an agreement signed in Marrakesh, Morroco on 15 April 1994, establishing World Trade Organization. This Agreement defines the scope, functions and structure of the World Trade Organization (WTO)

Annex 1

Annex 1A 

  Agreement on Trade in Goods 

»General Interpretative Note

»GATT 1994

  - 6 Understandings (on the interpretation of various GATT provisions)

  - Marrakesh Protocol to the GATT 19

    + Schedules of Tariff Concessions

»Specific Agreements (11)

Annex 1B  Agreement on Trade in Services (GATS)

»Schedules of specific commitments

»MFN exemptions

Annex 1C  Trade-related aspects of Intellectual Property Rights (TRIPS)                   

Refer also to pertinent Convention on Intellectual Property Rights (WIPO)

Annex 2  Understanding on Rules and Procedures Governing the Settlement of Disputes

Annex 3  Trade Policy Review Mechanism

Annex 4  Plurilateral Trade Agreements

5. GATT organization structure

a. Ministerial conference

which is the highest decision making forum, this position set a meeting regularly once every two years

b. General council

who served as an executive board, consisting of representatives of the members. They hold meetings as needed.

c. Council for trade in goods

which is tasked with monitoring the implementation of the agreements reached in the field of trade in goods.

d. Council for trade in services

which is tasked with monitoring the implementation of the agreements reached in the field of trade in services

e. Council for Trade Related Aspects of Intellectual Property Rights

which organizes trade dispute resolution forum between members.

5. Provisions in GATT trade

Trade provisions that make up the multilateral trading system embodied in the GATT, has three main provisions:-First, and most important is the GATT itself along with the 38th article.
-Second, resulting from the Tokyo round of negotiations (Tokyo Round 1973-1979) is the provision of anti-dumping, subsidies and non-tariff provisions or sectoral issues. Although membership in the provisions of this limited 2nd nature, is only 30 countries, but these countries control most of the world trade.
-Third, the provisions regarding "multifibre arrangements". This provision is an exception to the general GATT provisions, especially regarding textiles and clothing.

6. Principle of GATT

• Most-favoured-nation (MFN): treating other people equally

     the WTO agreements, countries cannot normally discriminate between their trading partners. you have to do the same for others members. This principle is contained in Article 1 of GATT.The same treatment should be carried out immediately and unconditionally against products originating in or submitted to all members of GATT.

• National Treatment

   Imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle is also found in all three WTO agreements (Article 3 of GATT, Article 17 of GATT and Article 3 of TRIPS). National treatment only applies once a product, service or item of intellectual property has entered the market

• Protection only through Tariff

Protection should be given to domestic industries only through customs tariffs and not through other commercial measures. Although permitted, the use of these rates remain subject to the provisions of GATT. For example, the imposition or application of such rates and the discriminatory nature should not be subject to tariff commitments to the GATT / WTO

• Quantitative restrictions on trade are prohibited.

Quantitative restrictions on exports or imports of any kind (eg import or export quotas, restrictions on the use of import or export licenses, supervision of payment products import or export), are generally prohibited (Article IX). This is because such practices interfere with normal trade practices. One reason for this prohibition is that quantitative restrictions are considered to have a greater protective effect than tariff measures and are more likely to distort free trade.

• the principle of reciprocity

The principle of reciprocity, which is the treatment given to the state of a country other as trading partners should also be given also by trading partner countries.

• Special Treatment For Developing Countries

Approximately two thirds GATT member countries are developing countries that are still in the early stages towards economic development. To help their development, in 1965, a new section is Part IV contains three chapters (Chapter XXXVI-XXXVIII), added to the GATT.

Here a video that will help us to understand more about GATT

conclusion:

from this session we can understand more about GATT, that GATT was not an organization but an agreement. then, we can learn more about the function of GATT, the principles and the structure organization

sources:

1. http://www.academia.edu/1748822/GATT_and_WTO

2. Huala Adolf. (2005). Hukum Perdagangan Internasional. 0th Edition. RAJAP. Jakarta. ISBN: 979-3654-55-4